UPL Ltd. share price target

UPL Q1 PAT soars 93% to Rs 551 cr, beat street estimates Consolidated revenue from operations stood at Rs 7833 crore in Q1 June 2020, declining 1% compared with Rs 7906 crore in Q1 June 2019. Profit before tax stood at Rs 801 crore in Q1 June 2020, rising 84% from Rs 435 crore in Q1 June 2019. Total tax expense surged 86% to Rs 143 crore in Q1 June 2020 over Q1 June 2019. Profit...

UPL Ltd. is a global agriculture solutions company engaged in the agrochemicals and industrial chemicals business with manufacturing sites across the world. Through recent expansion, the company has become a...

UPLL's results were significantly ahead of our estimates driven by (1) focus on improving product mix for higher margin and differentiated products (2) higher than anticipated shift in geographical mix headed towards more profitable regions like India and Europe. LATAM revenue declined 16% YoY due to order postponement (close to the season) and some delays in supply...

1 August 2020 In 1QFY21, gross margin expansion and synergy benefits aided EBITDA disruption in Latin America, North America, and Europe, (ii) the postponement of sales in Brazil from 1Q to 2Q due to fluctuation in the Brazilian real, and (iii) pre-buying in North America at the end of 4QFY20 impacting growth in the region in 1QFY21. In 1QFY21, UPLL reported strong revenue growth of 27% YoY in India v/s 15% industry growth. Revenue from the LATAM region declined 16% YoY on forex volatility in Brazil, which led to the postponement of orders to later quarters. Revenue from North America declined 14% YoY on pre-buying due to COVID-19 in 4QFY20. According to management, for 1QFY21, cost synergy realized from the Arysta acquisition stood at INR830m (USD11m) and revenue synergies at INR530m (USD7m). Gross debt was INR325b as of Jun20 v/s. Net debt was INR220b as of June20 (similar to March levels).

UPL Ltd. is a global agricultural solutions company engaged in the agrochemicals and industrial chemicals business with manufacturing sites across the world. Through recent expansion, the company has become a...

On like-to-like basis (i.e. including Arysta in 4QFY19), revenue grew 26% YoY Note that EBITDA growth of 25% in 4QFY20 was driven by cost and revenue synergies; excluding the same, EBITDA remained flat (refer For FY20, like-to-like revenue/EBITDA grew 13%/18%; revenue growth was driven by 16% volume growth, offset by 1% decline in prices and 2% forex In 4QFY20, strong revenue growth was witnessed across regions (North According to management, for 4QFY20/FY20, cost synergy realized from the Arysta acquisition stood at INR2.4b/INR7.7b and revenue synergies at Draft proposal on banning 27 pesticides in India would not impact the Cost synergy of USD150m, revenue synergy of USD200m and UPLL is aiming to reduce Net Debt to EBITDA to 2x by FY21 from 2.9x as at UPLLs FY20 revenue/EBITDA (like-to-like) grew 13%/18%, primarily driven by synergy benefits; excluding the same, base business (UPLL and Arysta; ex-synergy) operating performance remained flat (refer Additionally, net debt reduced by INR44b in FY20 (in line with guidance).

UPL's Q4 EBITDA was below our estimate at Rs 19bn as stronger revenue growth was offset by gross margin pressure and higher forex loss.

We have upgraded our topline/EBITDA/APAT by 3%/3.6%/11% for FY21E and 2.6%/0.6%/5.8% for FY22E but lowered our target price from Rs542 to Rs497 based on 7.0x FY22E EV/EBITDA (implied P/E on TP- 11x) due to lower than expected debt reduction (considering perpetual bond as part of debt). UPL...

We explore UPL's stock potential under three scenarios and find a convincing case for +100%/200% returns in our base/bull case over the next three years.

UPL Ltd. is a global agricultural solutions company engaged in the agrochemicals and industrial chemicals business with manufacturing sites across the world. Through recent expansion, the company has become a...